Each year, the government makes a decision about how to spend the money it collects from taxpayers. When it spends more than it has collected, it takes on debt on behalf of all Australians. On top of the tax they currently pay, Australians end up being part-owners of a debt on which they have to pay interest. This year, the Government is saying the budget will restore 'intergenerational equity'. This analysis argues that policies presented as promoting ‘intergenerational equity’ are failing to address the structural drivers of inequality.

The paper presents recent polling of 18 to 34 year olds on found that young Australians are worried about burgeoning public debt. It proposes alternative policies to deliver intergenerational fairness.

The paper proposes that a fair budget would be one that helps give young Australians access to the opportunities that benefited previous generations. True intergenerational fairness requires lower taxes – and indexed tax brackets – lower debt, more housing supply and cheaper energy for young Australians.

Key findings

• Young Australians want economic opportunity, home ownership, and reward for work more than symbolic intergenerational equity measures.
• Two-thirds of young Australians fear they will be hit with future tax increases, and only 24% expect the pension system will be able to support them in retirement.
• Bracket creep cuts real income by pushing workers into higher tax brackets even when inflation erodes their buying power.

Recommendations

• Stop the hidden tax rises by indexing bracket creep.
• Stop fuelling house price growth through grants to buyers, and focus on encouraging housing construction.
• Remove distortions from the energy market and allow the use of cheap and abundant sources of electricity.